Overview

AgaMatrix (a Boston-based venture in development) offers digital signal processing (DSP), technology that significantly improves the performance and functionality of biosensors. AgaMatrix’s core DSP algorithms address a variety of immediate issues in the medical device market. They significantly improve the performance of biosensors, without the need for expensive specialized hardware or additional chemicals. AgaMatrix initially will sell medical device manufacturers, specifically home glucose monitors and point-of-care blood analyzers. AgaMatrix is expecting to generate positive cash flow by the third year. Future healthcare segments will include the large immunoassay or implantable biosensor sector; and other vertical industries which heavily rely upon biosensors like the military chemical agent detector, environmental air/water Quality monitoring, and industrial processing.

Problem – Glucose Monitors Are Burdensome, Painful To Use

Many diabetic patients do not use home glucose devices as prescribed. This is because the procedure is too heavy or too painful. Patients must be able to puncture their finger up to seven times daily to draw blood onto the test strip to insert into the glucose biosensor. The average compliance rate for testing is less than 1.5 times a day, resulting in the acceleration of complications caused by diabetes, such as blindness, stroke, and heart and kidney failure. Diabetes is the leading cause and type of blindness in people between 20 and 74 years old. Better glucose monitoring compliance can be the best way to prevent it. The root cause of non-compliance has been identified by device makers as the physical pain caused by using current devices. They are currently looking for ways to reduce the required sample size. AgaMatrix technology will enable less invasive drawing mechanisms to meet the overwhelming demand for less painful alternatives.

Issues in the market for hospital blood analyzers are more likely to be related to the low accuracy and completeness of the devices. This leads to lower adoption. AgaMatrix’s value proposition to this market is very clear: devices that are more accurate and sensitive will stand a higher chance of being more readily adopted.

The Software Solution to a Hardware Challenge

The biosensor device industry has tried to overcome issues such as accuracy, robustness, and sensitivity by improving the hardware (or chemical) aspects of its devices. For example, their chemical and biological design. By contrast, AgaMatrix is pioneering a software approach based on digital signal processing (DSP) algorithms that has a number of distinct practical advantages, including lower cost, easier/faster upgrade capability, and complementarity with respect to a wide variety of chemistry/hardware-based biosensor technologies.

AgaMatrix’#8217’s solution is a collection of software modules that allows for new functionality and significantly improves performance of biosensor devices. You can leverage increased signal-to-noise ratios to lower blood sample requirements. AgaMatrix provides the opportunity to increase the accuracy of point-of-care hospital analyzers. Boosting accuracy removes a major roadblock hindering widespread adoption of portable blood analyzers in place of conventional laboratory equipment.

Software DSP solutions have been crucial in the growth of many industries where physical limitations could have prevented them from growing. To overcome disc-skipping issues and compensate for low-quality hardware filters, CD players were built in the 1980s on error-correction algorithm and oversampling. AgaMatrix’s algorithms provide analogous solutions in the biosensor space.

Business Model: Software Licensing from Device Makers and Royalty Fees

AgaMatrix will initially operate as a technology license company. The company will earn royalty revenue streams on consumables sold by device manufacturers (e.g., disposable test strips, cartridges, and other parts used in the devices). Revenues will be acquired from the sale of the technology to home blood glucose device makers, hospital point-of-care blood analyzer makers, and minimally invasive and implantable blood glucose biosensor developers.

Therasense – an Illustration of How Disruptable the Glucose Market Is

Four major players dominated the blood sugar market a few decades ago (numbers are annual test strips revenue). Roche ($1.

27B), J & J (1.09B), Bayer (650M), Abbot (545M) These companies have been around since 1980. Their product roll-out has been less than two years. They have made $200 million annually, gone public and now have over $800,000,000 in market capitalization. Bottom line: This is a market that is open to new technologies, especially if it can reduce pain for users.

Competitive Advantages There are no direct competitors to our unique and proprietary approach that we have developed over seven years by our scientific team. AgaMatrix technology can be used to complement indirect competition from major medical device manufacturers’ in-house labs. The sustainable competitive advantages that AgaMatrix commands include:

• Superior software paradigm that complements chemical (hardware), advances in biosensors.
• The seven-year period of biosensor research was a time of great expertise.
• Monopolization of the scientific team responsible for the original paradigm innovation.
• Development lead time at least 2 years longer than the potential competition
• Intellectual property strategy that includes two core utility patents (filed), and three defensive utility Patents.

Customer Track

As potential customer targets, we have already spoken to two manufacturers who make blood glucose monitors as well as one manufacturer of hospital points-of-care devices. There are over 20 other major potential target companies we have not yet approached. Here is a summary listing of all the companies we have reached.

• Two companies with blood glucose monitors expressed strong interest in being partners (discussions between Presidents); however, details are not confidential but we think we can close a partnership by June 2002.
• Strong interest from a leading blood glucose monitor maker (J & J – discussions with Director-level staff) and the leading hospital point-of-care device maker (i-STAT – discussions with Vice President and Director-level staff).

The Team

A current team composed of:

• The three leading scientists pioneering the use of digital signal processing to improve biosensor technology, with an aggregate of over 40 years of direct DSP/biosensor research experience.
• Entrepreneurs who started, built, and ran a enterprise software company.
• An expanding board of veteran advisors made up of medical doctors who have healthcare business experience.
• After seed financing, an additional technical team of three engineers committed to joining company. It is comprised of engineers from MIT/Tufts, who collectively have more than 25+ years of experience in technical management.

Financing

Since its inception, AgaMatrix was self-funded entirely by its principals. Recently, the company raised $500K from a variety of angel investors in healthcare as well as IncTANK, an earlier stage venture capital fund. A Series A round of approximately $1,000,000 is expected within four to five months.

These rounds of financing are intended to achieve the following objectives: the finalization of version 1.0, and the acquisition at least 1 paying customer within a 13-month period. These milestones seem reasonable given the current state in product development and customer traction. To be cash flow positive, the company plans to raise approximately $4 million in an institutional or private round by year end. Current valuation drivers include:

• A world-class scientific group consisting of Dr. Sridhar Singh (CTO), Dr. Justin Gooding and Doctor. Ian Harding. This team also includes an engineering team and an aggressive business team that has start-up management and startup experience.
• Technology that is applicable to many other vertical markets, and protected by an aggressive IP strategy.
• External validation from existing relationships with potential customers and advancement to final rounds in a number of national business plan competitions.

1.1 Mission

AgaMatrix is a company that develops next-generation solutions for biological and chemical sensors. AgaMatrix is able to significantly increase the accuracy, sensitivity, robustness, and effectiveness of a wide range of sensors in order to make medical diagnostic devices more efficient.

AgaMatrix’s technology makes it possible to develop devices that are almost painless for patients. This will also meet the growing demand for medical diagnostics that is more accurate. It will provide software solutions to a critical hardware issue that affects millions of patients with diabetes and hospital patients around the world.

1.2 Objectives

• Develop technology solutions that will increase the adoption and compliance rates of diagnostic medical devices by improving the functionality and performance of biosensors, specifically for home blood glucose monitors and hospital point-of-care blood analyzers.
• Three years to achieve positive cash flow
• Reach $50 million in annual revenues by year four.
• Expand into industries that heavily rely in biosensors like industrial processing and military sectors.